The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister last night confirmed the private sector minimum wage will increase by 34 percent to $260 per week come January 2023 while admitting it “not eliminate the hardship of trying to make ends”.

Philip Davis KC, in his national address, confirmed previous Tribune Business revelations on the amount of the increase while explaining that the three-month delay in its implementation is designed to enable impacted businesses to adjust their cost structures.

“The last time the minimum wage was raised in our country was 2015,” the Prime Minister told Bahamians. “A new increase has long been overdue. Tonight, I’m announcing that the country’s new minimum wage will be $260 a week.

“For minimum wage earners in the public service, the change will be retroactive going back to July of this year. For minimum wage earners in the private sector, the increase will begin in a little less than three months in January of the coming year, allowing employers time to prepare for the increased expense.

“The higher minimum wage will benefit tens of thousands of Bahamians. Will the increase help? Yes, it will. It was long awaited, long overdue, and the extra money every week will make a difference.” The $50 per week rise translates into a $200 increase in take home pay for a minimum wage worker every four weeks.

Raising incomes for the lowest-paid workers in Bahamian society has assumed increasing importance due to soaring inflation that has sparked a cost of living crisis for many both locally and worldwide. Any rise in take home pay will help these persons and their families to at least offset some of the price hikes witnessed across multiple essentials and consumer goods since the COVID-19 pandemic.

The Government will likely see the increase as essential to offsetting at least some of the phased increases in Bahamas Power & Light’s (BPL) fuel charge that were announced last week. However, many impacted businesses may see it as just another expenses hit and additional cost burden that they must bear in the post-COVID world.

Mr Davis himself conceded that the minimum wage increase by itself is far from a panacea for the cost of living crisis impacting hundreds of Bahamian households, both middle class and low income. “We are aware that this will not eliminate the hardship of trying to make ends meet in today’s economy,” he said. “Instead, it represents progress on the way to a livable wage.

“The raise was negotiated by the National Tripartite Council, which includes the Government and representatives from the private sector and unions. Our shared goal was to raise the minimum wage without having a negative impact on employment or job growth, and we believe that has been achieved.” No timelines or figures were provided for the livable wage, which is unlikely to figure in discussions at present given the fall-out in the private sector from any further rise.

Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business in late August that an increase to $260 per week - amounting to $50 per week or roughly $200 per month - was something the organised labour movement can live with given the economy’s continuing struggles to fully recover from COVID-19 even though it falls short of their $300 target.

The $260 minimum wage is 13.3 percent, or $40, short of the unions’ ideal. The Davis administration had been considering three separate proposed minimum wage increases along the lines suggested by Mr Ferguson.

These included a recommendation of around $230 per week from the private sector; $300 per week from the trade unions and organised labour; and the likely $260 per week which was described as the Government’s “compromise” solution. The $260 is also some $10 per week higher than the $250 minimum wage that the Progressive Liberal Party (PLP) committed to in its election manifesto, potentially allowing it to claim a victory over the increase.

Robert Farquharson, the director of labour, previously estimated to Tribune Business that around 25 percent of the Bahamian workforce - some 60,000 workers - will benefit from a minimum wage increase. “There are approximately 235,000 in the workforce, and based on information from the Department of Statistics we estimate 25 percent to be on minimum wage or will be impacted by a rise in the minimum wage,” he said.

Mr Farquharson did not break down the 25 percent, or near-60,000, who would benefit from a minimum wage hike although it is possible that figure includes a significant number of persons who make the majority of their income in commissions or tips. Such workers are often paid a low basic salary, and those numbers will also include the likes of food store and gas station workers.

While a minimum wage increase will raise labour costs for employers, and could provide a disincentive to hiring for some, it will also boost living standards for impacted workers and potentially boost the economy by raising consumer spending.

Mr Davis, meanwhile, sought to deliver a message that it is “not business as usual” when it comes to the economy and government policy. He pointed to the Government’s goal of slashing The Bahamas’ $1bn food import bill by 25 percent, amounting to a roughly $250m cut, by 2025 although few hard details were provided on how this will be achieved.

“I want to emphasise how profoundly I believe agriculture should play a central role in the next stage of our national development,” he added. “We talked earlier about our country’s vulnerability to rising prices. Why shouldn’t we grow more of our food here at home?

“We can lower food prices for families, keep more of our money inside our country, and create a new wave of successful Bahamian entrepreneurs. We are not simply talking about small-scale farms. Food production is big business. Consider poultry farming. There are millions to be made in this industry. It is past time for Bahamian farmers to own this market. Every chicken in every bag should come from a Bahamian farmer.”

On healthcare, Mr Davis promised that the groundbreaking for a new $200m hospital for Grand Bahama will take place before year-end 2022. “And tonight I’m announcing that we have made major progress on securing both the land and the resources for a new hospital in New Providence,” he added.

“ Our capital has long needed an additional hospital to keep up with expanding health care needs. These new, state-of-the-art hospitals in Grand Bahama and New Providence will help Bahamian patients receive top quality care, and improve working conditions for our doctors, nurses and hospital staff.” No details on the new New Providence hospital were provided.